http://www0.mercurycenter.com/front/docs1/gas0410.htm

Price for gas surges again

Posted at 9:35 p.m. PDT Monday, April 9, 2001 BY GARY RICHARDS

Mercury News

If you thought record-setting gas prices last fall were a shock, brace yourself again. Prices reached as high as $2.09 a gallon at some stations in Silicon Valley on Monday, rising 12 to 15 cents within the past week with the promise of going even higher.

``Wow!'' exclaimed motorist Cathy Martin of San Jose, who last visited the pump a week ago and paid more than $2 a gallon at a Shell station near Great America. ``It's crazy, and I've got to get gas again this afternoon.''

Many discount stations are now topping $1.83 for a gallon of self-serve unleaded in the South Bay, and at $1.99 along the Peninsula. More expensive brands are just that, such as the Texaco station off Saratoga Avenue in Saratoga, where prices climbed 20 cents in little more than a week to $2.09 a gallon for the cheapest blend on Monday.

The San Jose average is $1.92, while San Francisco is at $1.97, according to figures released Monday by the California State Automobile Association. That's 5 to 8 cents higher than a year ago, when prices began their march to a record $1.98 average in the Bay Area by Labor Day.

Tight supplies, rising crude costs and the expectation that demand will increase with the approach of summer are factors behind the latest price surge, energy experts say. Those same factors caused the Department of Transportation last week to issue a warning that prices in the nation's largest urban areas may spike to California levels this summer.

``This is not a good time,'' said Jerry Cummings, president of Coast Oil, adding that production had slowed for planned and unplanned maintenance at Arco, Chevron, Valero and Texaco refineries from Washington state to Los Angeles. ``There are a lot of them having problems.''

Inventory down

It's showing up on inventory counts. Stocks of reformulated gas were down more than 19 percent at California refineries as of March 30, a decline of nearly 100,000 barrels from a year ago, according to the California Energy Commission. This comes at a time state motorists are burning up more gas than ever. They consumed nearly 15 billion gallons in 2000, about 1 billion more than in 1999 and almost twice the annual increase since 1995.

Refinery supplies nationwide have fallen in eight of the past nine weeks, the American Petroleum Institute said, leaving them 5 percent below levels a year ago. That's when pump prices reached higher than $2 a gallon in the Midwest. ``We are definitely going to see prices above $2 again, and soon,'' Pat Pitoon, owner of a Citgo service station in Chicago, told Bloomberg News Service.

Refineries nationwide are shifting production to reformulated gas required by various states, contributing to a 7-cent-a-gallon price increase nationwide to $1.54 a gallon.

Here's more bad news if you're waiting to fill up the sport utility vehicle: Crude oil that will arrive in the United States next month rose as much as 61 cents to $27.67 a barrel -- 10 percent higher than this time last year.

While they're unsure of the timing, some experts expect crude prices to fall to $21, which could mean to an easing for local motorists. And a cooling economy might bring prices down as well. But a number of California refineries use natural gas in the production of automobile fuel, and the fear of rolling blackouts next month and higher energy bills may keep prices high.

Renewed anxiety

``There's speculation that prices are going to go higher,'' said Brownwyn Hogan, who tracks fuel prices for the California auto club. ``And just talking about higher prices can sometimes keep prices high.'' Bay Area motorists -- perhaps numbed by paying the nation's highest prices for five years -- have been silent. There's been no Internet talk of boycotts, as in past years.

But some are starting to pay attention. Nearly two dozen cars were lined up Sunday at an Arco station in Campbell to buy gas for $1.73 a gallon, spilling onto busy Campbell Avenue, where a few blocks away the price was $1.99 at a Shell station. By Monday, the price had risen 2 more cents at the Arco station. This time, there was no line, and Millie Williams of Campbell zipped in for a fill. ``This seems like a bargain compared to every place else,'' she said.

Mercury News wire services contributed to this report. Contact Gary Richards at mrroadshow@sjmercury.com or (408) 920-5335.

-- Swissrose (cellier3@mindspring.com), April 10, 2001